Chemicals Legislation Faces New Reforms in the UK, Europe and US post Brexit

Barack Obama signed the bipartisan Frank R. Lautenberg Chemical Safety for the 21st Century Act on 22 June of this year. This Act, which came into immediate effect, amends the core provisions of the Toxic Substances Control Act (TSCA), the primary federal law governing chemicals for the first time in 40 years.

The amendments mandate potentially significant actions by the US Environmental Protection Agency (EPA), including: risk screening to identify “high-priority” chemicals; risk evaluation of those chemicals; and promulgation of restrictions (including a possible ban) on any chemical deemed to “present an unreasonable risk”. The amendments not only allow states and localities to continue enforcement of their existing chemicals laws, but also grant states some latitude – and, in the event of EPA inaction, wide latitude – to enact new laws.

The TSCA amendments establish a series of ambitious deadlines to implement the measures. Within the first six months, EPA must begin risk evaluations on 10 “high priority” substances. Within the first year, EPA is required to complete several formal rulemakings, including to establish processes for prioritisation of additional chemicals as “high priority”, for risk evaluation and for “resetting” the inventory of chemicals in commerce. Within the following six months, the EPA must work on additional guidance documents, policies and activities, including with respect to the protection of confidential business information (CBI).

TSCA and REACH

The main EU legislation governing chemicals is the 2006 REACH Regulation (Registration, Evaluation, Authorisation and Restriction of Chemicals). REACH requires EU manufacturers and importers to submit a registration for their chemical substances and for certain products containing those substances; this registration must include extensive data on safety and environmental impact.

Unlike REACH, the TSCA amendments do not require the registration of all chemicals in commerce, but do mandate a risk evaluation and restriction process with some definite parallels to the REACH Substances of Very High Concern (SVHC) Candidate listing and SVHC authorisation regime. Under the amendments, EPA must proactively evaluate risks by screening all chemical substances to identify “high-priority” substances, evaluating these high-priority substances to determine which “present an unreasonable risk” and promulgating regulations to restrict and even ban any such “unreasonable risk” substances. Similar to the REACH SVHC Candidate listing process, the screening and risk evaluation must occur solely based on risk without regard to costs, but at the regulation stage, as with REACH authorisation, EPA may consider costs and availability of substitutes.

Among the major changes in the TSCA amendments is new authority for EPA to order testing without undergoing a lengthy rulemaking or consent order process. EPA could exercise this new authority in ways which compliment REACH, given that scientific information gathered to evaluate chemical substances for the TSCA regime may be used in submissions to the EU, and vice versa.

Effects of Brexit

It is difficult to predict what the impact of the UK’s decision to leave the EU will be on the European chemicals framework. The UK government has up to two years to negotiate the terms of withdrawal from the EU after it serves formal notice and there will be ongoing negotiations to define the new relationship.

For UK businesses, the REACH regime will remain in place, initially at least, in order to avoid a legislative vacuum caused by the repeal of EU laws before new UK laws are in place. The REACH Regulation 2006 is directly applicable in UK law and will therefore need to be reintroduced, amended or allowed to lapse.

If the UK stays part of the single market by continuing its membership of the European Economic Area (EEA) (referred to as the “Norwegian model”), it will continue to be required to implement REACH. The UK would remain in the existing single market for chemicals and maintain its REACH registrations, but it would lose its ability to take part in EU decisions. EU member states are involved in the process of evaluating whether substances need to be authorised or restricted, which means that they can influence where substances may be useful for domestic environmental or economic reasons.

If the UK leaves the single market, REACH would not apply. As per other non-EU manufacturers, the UK would have to get importers or appointed only representatives (ORs) (third party representatives) in the EU to register their substances. Subsequently, UK manufacturers may have to restructure their supply chains to enable compliance and will have to supply all relevant information and documentation needed for registration.

Should REACH no longer apply in the UK, the validity of REACH registered manufacturers, importers and ORs is unclear. It also remains to be seen whether the 5,000 REACH registrations that have been made by companies in the UK (the second-highest number in the EU, only exceeded by Germany) will be deactivated and replaced by importers or ORs in the EU, thereby increasing the cost of compliance. In addition, joint-registrants may need to replace UK-based lead registrants, which could lead to conflict regarding data ownership and cost sharing.

However, if the UK develops a national chemicals policy, UK companies may be relieved from the regulatory burden of REACH and it might be possible to reintroduce certain substances that have been phased out in the EU. Manufacturing companies in the UK are keen to see REACH administrative burdens reduced, in particular SMEs which suffer from the costs of the regime.

The final deadline for REACH registration of existing chemical substances is 31 May 2018, for substances manufactured or imported into the EU in annual volumes between one and 100 tonnes. It is likely that registrations will need to be completed by UK companies to continue trading on the single market until Brexit is finalised, even though these registrations may end up being deactivated in the future. Ongoing obligations in relation to new substances, supply chains and authorisations will also continue to apply.

The chemical regulatory landscape is changing, and quickly. Businesses need to keep up-to-date with the legislative position of the UK, US, the EU and elsewhere, to monitor new laws and compliance measures.

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